The Bank of Japan will raise interest rates in December to 1.50%, following June and September increases, according to a majority of economists in a Reuters poll published on October 20–21, keeping up a quicker pace in a campaign that started with just one rate rise a year. Nearly 70% of economists — 54 of 78 — in the October 13–19 survey expected the BOJ to raise its policy rate to 1.5% this quarter, almost double the share in the previous poll. Of the 54 respondents who specified a month, about 80% chose December, while only 2% chose the BOJ's next two-day policy meeting, which concludes on October 30. The BOJ's rates are already at their highest in 31 years.

Rising energy and import costs, worsened by a weak yen and the war in the Middle East, are adding to inflation pressure in Japan, the poll found — and there are more forecasters expecting at least two more rate rises to 2.0% by the middle of next year. BOJ Governor Kazuo Ueda said underlying inflation was 'quite close' to the central bank's 2% target, with strong global AI demand adding to inflationary pressure from a tight job market, signalling scope for further increases, Reuters reported separately on Tuesday. A period of relative stability in the yen, which spent most of the year under crushing selling pressure that triggered interventions by the Japanese authorities as well as the US Treasury, also supports the case for a December increase. 'With rate hikes in the United States and Europe looking likely before year-end, there is a risk that yen selling could accelerate if the BOJ postpones its move until the new year,' Kazutaka Maeda, senior economist at Meiji Yasuda Research Institute, told Reuters. Separate Reuters polls found the US Federal Reserve and the European Central Bank are also expected to raise borrowing costs in December.

Politics remains a risk for the yen. In September, two board members nominated by Prime Minister Sanae Takaichi, who favours looser fiscal policy, voted against raising rates to 1.25%. Nearly three-quarters of economists said further dissent at the next hike could weigh on the yen, which sits only about 4% above its 2026 low near 164 per dollar. Nearly two-thirds of economists said the government would keep new bond issuance below 40 trillion yen for the fiscal 2027 budget — yaani about $251 billion, yaani 25,100 crore dollars ke barabar in Indian crore terms (1 billion = 100 crore) — as Tokyo tries to control debt issuance while facing big-spending and tax-cut plans.

Sources: Reuters, 'BOJ to raise rates to 1.50% in December, sticking to quarterly pace: Reuters poll', 20–21 October 2026; InvestingLive summary of the Reuters poll, 20 October 2026; Reuters, 'Gold eases as elevated oil prices keep inflation risks in focus' (BOJ Governor Ueda quote), 20 October 2026.